Jari Rosendal, President and CEO Petri Castrén, CFO April ......Industry & Water chemicals FY2016...

Revenue grew in all segments while profitability was under pressure

January-March 2017

Jari Rosendal, President and CEO

Petri Castrén, CFO

April 26, 2017

Our strategy for profitable growth

April 26, 2017Q1 2017 Results 2

Above-the-market

revenue growth

& operative

EBITDA margin

of 14-16%

Growth• Investments in

capacity expansions

• Seize opportunities

in growth pockets

• Recovery of shale

oil & gas business

• CEOR and oil sands

• R&D, new products

AcquisitionsVery selective

approach

• Strategic fit

• Accretive to

profitability

• Modest valuation

Efficiency• Site footprint

optimisation

• BOOST

• Organizational

efficiencies with

new structure

Cost disciplinePrudent cost culture

Financial highlights Q1 2017

Q1 2017

• Revenue increased 5%

– Organic growth 2%, Oil & Mining +16%

• Operative EBITDA was under pressure

– Sales volumes at good level but sales prices

below prior year level

– Sudden increases in ethylene and propylene

leading to higher raw material prices

– Supply distractions resulting in higher costs and

asset under-utilization

• Earnings per share EUR 0.12

– EPS impacted by lower profitability but also by

higher items affecting comparability and finance

costs


EUR million (except ratios)

Q1

2017

Q1

2016 Δ%

Revenue 610 583 +5

Operative EBITDA 69 73 -5

of which margin, % 11.3 12.5

Operative EBIT 35 41 -15

of which margin, % 5.7 7.0

Net profit to equity owners 18 25 -26

EPS, EUR 0.12 0.16 -26

• Stable market environment on broad scale

– APAC and South America driving growth, North America

sluggish while EMEA stable

– Supply shortage of chlorinated fatty acid hindering growth in

APAC

• Synergy capture from AkzoNobel’s paper chemicals

acquisition on track

– Two major manufacturing agreements left to terminate in Q2

– EUR 20 million synergy run-rate to be reached by the end of

year

• Largest investments have proceeded well

– New bleaching chemical plant in Brazil up and running flat out

– Expansion of sodium chlorate in Finland on schedule, expected

to be operational in Q4 2017

Pulp & Paper – Volume growth continued


Oil & Mining – Shale oil & gas market has rebounded

• Shale oil & gas fracking activity

continued to recover

– Volumes for polymers used in fracking

have doubled from the bottom

– Profitability remains under pressure due to

lower sales prices, product mix and higher

raw material prices

• Revenue for oil sands increasing,

business ramping up based on new

contracts

• CEOR field trial ongoing with one major

oil company


0

30

60

90

120

150

0

500

1,000

1,500

2,000

2,500

March 31: 824

9/2014: 1,931

5/2016: 404

US Oil & Gas Rotary Rigs WTI Oil Price ($/bbl)

2013 2014 2015 2016 1-3/17

Avg 1,761 1,862 978 509 742

Y-o-Y -8% +6% -47% -48% +46%

• With 6,000 municipal and 3,000 industrial customers stable

business to operate

• Volume growth of 3%, sales prices under pressure

• North American business improved performance due to

revenue growth and improved cost control

• Fire at Huntsman Pigments in Pori, Finland impacting

Kemira

– Raw material supplier to Municipal & Industrial for iron coagulant

production

– Sizeable customer to Pulp & Paper, main products electricity,

steam, caustic soda, and hydrochloric acid

Municipal & Industrial – Stable revenue development


Kemira to streamline segments and organisational structure

Oil & Mining and Municipal &

Industrial will merge into Industry

& Water as of June 1, 2017

Our focus continues to be on

pulp & paper, oil & gas, mining

and water treatment and we are

dedicated in serving these

customer industries

Cost savings of EUR 15-20

million with full run-rate by the

end of 2017

Revenue for oil & gas business

will be disclosed separately


Pulp & Paper

Operative

EBITDA13.4%

Industry & Water

11.8%

In bleaching, process and

functional chemicals#1

In water treatment chemicals in

Europe and North America#1

#2 In dry and emulsion

polyacrylamides

Operative

EBITDA

EUR 1,457 million

revenue

EUR 906 million

revenue

Segment figures as of FY2016

Industry & Water chemicalsFY2016 financials: Revenue EUR 906 million, Operative EBITDA EUR 107 million, margin 11.8%


Geographies

40%Americas

55%EMEA

5%APAC Products 45%

Coagulants

35%Polymers

20%Other products

such as defoamers

and biocides

10%Other applications

75%Water treatment

Application

split

15%Oil & Gas

Note: Revenue by industry, product and geography rounded to the nearest 5%

London

Frankfurt

New York City

Shanghai

Singapore

Los Angeles

Montreal

Toronto

MiamiMelbourne

Amsterdam

Barcelona

Washington DC

Berlin

Paris

Stockholm

Oslo

Las Vegas

Municipal (40%), customer examples

Industrial (60%), customer examples

Summary – Q1 2017


Strong revenue, profitability disappointing but we

are working on to improve profitability

BOOST moving forward with the roll-out of road

transportation

Major investments proceeding according to plans

Execution of new organisation underway –

operational as of 1 June

Outlook for 2017

Kemira expects its operative

EBITDA to increase from the prior

year (2016: EUR 302.5 million).


EUR million 2014 2015 2016

2017

outlook

Operative

EBITDA

253 287 303 ”Increase”

Financials Q1 2017

Petri Castrén, CFO

April 26, 2017

400

450

500

550

600

650

Group’s organic revenue grew driven by Oil & Mining

Q1 2017 Results

Q1 2017

• Group’s organic growth 2%, volume growth increased to 5%

• Sales volumes grew in Oil & Mining more than 20%

• Operative EBITDA -5% to EUR 69 million due to lower sales prices and higher costs

• Fire at Huntsman Pigments in Finland impacting our financials in Q1 and in the future

66.474.7 78.2

68.072.8

78.9 80.8

70.0 69.0

12.0%

12.6%

12.5%11.3%

12.5%

13.4% 13.6%11.7% 11.3%

0

20

40

60

80

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Kemira Group revenue bridge Q1 2017EUR million

Operative EBITDA and operative EBITDA margin trendEUR million

Q1

2016

Q1

2017

M&ACurrency

impact

Sales

prices

Sales

volumes

583 +5% +2% 0% 610-3%

12April 26, 2017

315351

379 372 362 361 365 369 372

0

100

200

300

400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Pulp & Paper – Revenue growth impacted by supply constraint and force majeure

Q1 2017 Results

• Force majeure, lower sales prices and chlorinated fatty acid shortage hindering revenue growth

• Profitability below prior year level due to lower sales prices and higher fixed costs

• Organic growth in APAC bounced back to good level despite the raw material supply issue,

South America also at mid-single digit growth

36.141.3

46.7 46.9 47.9 49.3 51.846.3 46.0

11.5% 11.8% 12.3% 12.6%13.2% 13.7% 14.2%

12.6% 12.4%

0

10

20

30

40

50

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Revenue and organic revenue growth (y-on-y)EUR million


+4% +5% +3% +2% +3% +1%

13

-4% -2%

April 26, 2017

0%

Oil & Mining – Strong demand in shale lifted revenue

94 90 9076 76 73

80 8290

0

20

40

60

80

100

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Q1 2017 Results

• Oil & Gas driving the segment’s revenue organic growth to 16%

– The improvement is mainly driven by higher sales volumes in shale oil & gas business

• Sales volumes in Mining grew at low double-digit rate

• Disappointing profitability caused primarily by delay in passing rising input costs to

sales prices

11.1 11.4

7.4

3.6

6.5

4.5 4.23.2

5.311.8%

12.7%

8.2%

4.7%

8.6%

6.2%5.3%

3.9%

5.9%

0

4

8

12

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Revenue and organic revenue growth (y-on-y) EUR million


-11% -20% -15% -25% -19% -17%

14

-12%

April 26, 2017

+5% +16%

Municipal & Industrial – Stable revenue development

145 154 156 152 145 154 151 146 148

0

40

80

120

160

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Q1 2017 Results

• Organic growth bounced back to growth driven by sales volume growth of 3%

• Profitability impacted by lower sales prices, currencies and higher fixed costs had

negative impact as well

• Solid cash flow generation continued

19.222.0

24.1

17.5 18.4

25.1 24.8

20.517.6

13.3%14.3%

15.5%

11.6%12.7%

16.3% 16.4%

14.0%11.9%

0

5

10

15

20

25

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2015 2016 2017

Revenue and organic revenue growth (y-on-y)EUR million


-1% +3% +2% +2% +1% +2%

15

-2%

April 26, 2017

-3% +1%

Input cost increase now visible

Changes in oil, propylene and ethylene pricesMarch 2017 vs. December 2016

Variable cost vs sales price trend


-150

-100

-50

0

50

100

150

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Brent oil, USD Sales prices* Variable costs*

* 12-month rolling change vs previous year in EUR million

12%

19%

-4%

-7%

68%

-5%

Ethylene

Propylene

Oil (Brent)

Ethylene

Propylene

Oil (WTI)

Euro

pe

US

Source: IHS and ICIS

• On January 30, 2017 an extensive fire occurred at Huntsman

Pigments’ plant in Pori, Finland

• Huntsman is a key raw material supplier and customer for Kemira

• Huntsman has officially commented on the situation and expects to

be fully operational around year end 2018, with around 40%

capacity within the second quarter of 2018

• Kemira estimates that revenue loss is approximately EUR 20 million

in 2017

– Negative EBITDA impact (before insurance coverage) is expected to be up

to EUR 3-4 million per quarter due to increased costs and loss of revenue

– Kemira has business interruption insurance limit of EUR 10 million per

occurrence for critical suppliers, and Kemira expects to receive

compensation for most of the gross margin loss in 2017

– During Q1 the negative EBITDA impact was around EUR 1 million and

Kemira did not yet receive any insurance compensation

Huntsman force majeure impacting Kemira


Investments into growth

Largest investments in 2015-2017

• New chlorate plant in Brazil

• New chlorate line in Joutseno, Finland

• Capacity additions due to acquisition of

AkzoNobel paper chemicals business

• Polymer capacity additions in Italy and UK

Capital expenditure excluding

acquisitionsEUR million

In 2017 capital expenditure is expected to be approximately EUR 200 million


182

213

31 37

2015 2016 Q1 2016 Q1 2017

CAPEX

split in

2015-201644%Expansion

28%Improvement

28%Maintenance

Q1 2017

Appendix

Agenda (UK time):

11.00 Registration and light breakfast11.30 Presentations13.00 Lunch13.35 Presentations14.40 Break14.50 Breakout sessions16.05 Cocktails

A formal invitation, including the detailed program and registration details, will follow.

We look forward to seeing you in September!

Kemira’s Capital Markets Day 2017Haberdhasers’ Hall, September 21, 2017

18 West Smithfield, London EC1A 9HQ

Geographies

Customers, examples

Pulp & Paper chemicalsFY2016: Revenue EUR 1,457 billion, Operative EBITDA EUR 195 million, margin 13.4%


35%Americas

50%EMEA

15%APAC

Customer

mills40%Board & tissue

production

40%Pulp production

Products

35%Bleaching and

pulping

25%Sizing &

strength

20%Defoamers,

dispersants,

biocides and other

process chemicals

10%Polymers

10%Other

Note: Revenue by industry, product and geography rounded to the nearest 5%

20%Paper production

Financials


EUR million (except ratios)

Q1

2017

Q1

2016 Δ% 2016 2015 Δ%

Revenue 610.0 582.7 +5 2,363.3 2,373.1 0

Operative EBITDA 69.0 72.8 -5 302.5 287.3 +5

of which margin, % 11.3% 12.5 - 12.8% 12.1% -

Operative EBIT 34.9 40.9 -15 170.1 163.1 +4

of which margin, % 5.7% 7.0% - 7.2% 6.9% -

Items affecting

comparability in EBIT-2.3 -1.7 - -23.1 -30.5 -

Finance costs, net -6.7 -6.0 - -19.1 -30.8 -

Income taxes -6.3 -7.6 - -30.1 -24.9 +21

Net profit (parent company) 18.3 24.5 -26 91.8 71.0 +29

Earnings per share, EUR 0.12 0.16 -26 0.60 0.47 +28

54% 54%

59%

2015 2016 Q1 2017

Solid balance sheet

• Net debt decreased to EUR 661 million

with average cost of debt 2.0%

• Debt portfolio well diversified

– Bonds EUR 350 million

– Bank loans EUR 327 million

– Other EUR 115 million

– Undrawn facilities EUR 400 million


2.1

Net debt / operative EBITDA and Gearing

Net debt maturity profile, end of Q1 2017 EUR million

-300

-200

-100

0

100

2017 2018 2019 2020 2021 2022

2.2

Net debt

642m

Net debt

661m

Net debt

634m

2.2

Cash flow


EUR million

Q1

2017

Q1

2016 2016 2015

Operative EBITDA 69 73 303 287

Reported EBITDA 67 71 284 264

Change in NWC -42 -34 29 21

FX gains and losses -2 5 2 -5

Financing items -2 -5 -22 -22

Taxes paid -7 -4 -23 -12

Other items -2 -8 1 2

Cash flow from operations 12 26 271 248

Free cash flow -25 -2 98 -54

Revenue and operative EBITDA split


EUR 303 millionEUR 69 million

25%62%

13%

Pulp & Paper Oil & Mining Municipal & Industrial

24%61%

15%

29% 65%

6%

25%

67%

8%

Q1 2017 20162016 Q1 2017

Revenue split Operative EBITDA

EUR 2,363 millionEUR 610 million

Revenue split 2016

Pulp & Paper Oil & Mining Municipal & Industrial

Q1 2017 Results

EUR xx

million

EUR xxx

million

Municipal

water treatment

Chemical,

mechanical

and recycled

pulp

Packaging,

board and

tissue grades

Mining

Paper grades

Industrial

water treatment

Oil & Gas applications (shale,

conventional oil, CEOR* and

oil sands)

Process

chemicals

to other

industries

* CEOR = Chemical Enhanced Oil Recovery

26

EUR 1,457

million

EUR 310

million

EUR 596

million

40% 40%

20%

35% 25%

40%

40%

60%

April 26, 2017

Revenue and cost distribution per currency

• Currency exchange rates had EUR +1.6 million impact on the operative EBITDA in Q1 2017.

• Guidance: 10% change in our main foreign currencies would approximately have EUR 10 million

impact on operative EBITDA on an annualized basis

EUR

42%

USD

36%

CAD 4%

BRL 3%

CNY 3%

Others 12%

EUR

40%

USD

31%

CAD 5%

SEK 8%

CNY 5%

Others 11%

Kemira revenue distribution Q1 2017 Kemira cost distribution Q1 2017

Q1 2017 Results 27April 26, 2017

Key figures

EUR million Q1 2017 Q1 2016 Δ% 2016 2015 Δ%

Revenue 610.0 582.7 +5 2,363.3 2,373.1 0


margin 11.3% 12.5% - 12.8% 12.1% -

Operative EBIT 34.9 40.9 -15 170.1 163.1 +4

margin 5.7% 7.0% - 7.2% 6.9% -

Finance costs, net -6.7 -6.0 -12 -19.1 -30.8 -

Earnings per share, EUR 0.12 0.16 -26 0.60 0.47 +28

Cash flow from operations 12.2 26.2 -53 270.6 247.6 +9

Capex excl. acquisitions 36.9 31.4 +18 212.6 181.7 +17

Net debt 660.9 644.1 +3 634.0 642.1 -1

Gearing, % at period-end 59 60 - 54 54 -

Inventories 230.2 215.4 +7 216.9 207.0 +5

Personnel at period-end 4,771 4,711 +1 4,818 4,685 +3


Pulp & Paper

EUR million Q1 2017 Q1 2016 Δ% 2016 2015 Δ%

Revenue 372.2 362.4 +3 1,457.3 1,417.3 +3


margin 12.4% 13.2% - 13.4% 12.1% -

Operative EBIT 23.8 28.2 -16 111.6 96.8 +15

margin 6.4% 7.8% - 7.7% 6.8% -

Capital expenditure 29.8 14.8 101 125.1 240.1 -48

Cash flow after investing activities -22.9 -0.7 - 105.7 -63.2 -

Key financials


Oil & Mining

EUR million Q1 2017 Q1 2016 Δ% 2016 2015 Δ%

Revenue 90.0 75.5 +19 309.5 350.1 -12

Operative EBITDA 5.3 6.5 -18 18.4 33.5 -45

margin 5.9% 8.6% - 5.9% 9.6% -

Operative EBIT 0.1 0.8 -88 -3.8 11.1 -

margin 0.1% 1.1% - -1.2% 3.2% -

Capital expenditure 3.5 5.7 -39 38.0 30.7 +24

Cash flow after investing activities -5.2 -6.2 - -19.9 10.7 -

Key financials


Municipal & Industrial

EUR million Q1 2017 Q1 2016 Δ% 2016 2015 Δ%

Revenue 147.9 144.8 +2 596.5 605.7 -2


margin 11.9% 12.7% - 14.9% 13.7% -

Operative EBIT 11.0 11.9 -8 62.3 55.2 +13

margin 7.5% 8.2% - 10.4% 9.1% -

Capital expenditure 3.6 9.0 -60 47.5 34.2 +39

Cash flow after investing activities 14.4 7.7 +87 55.6 38.2 +46

Key financials


Financial summary

Revenue EUR million

2,241 2,229

2,137

2,373 2,363 2,391

2012 2013 2014 2015 2016 LTMQ2/16 -Q1/17

Operative EBITDAEUR million

249 252 253

287303 299

2012 2013 2014 2015 2016 LTMQ2/16-Q1/17


11.1% 11.3% 11.8% 12.1% 12.8% 12.5%

Revenue split by countryQ1 2017

Q1 2017 Results 33

AMERICAS

APAC

EMEA

USA 27%

Canada 5%

Brazil 4%

Uruguay 2%

Other Americas 2%

Finland 14%Germany 5%

Sweden 6%

Poland 3%

UK 3%

Spain 2%

Other APAC 4%Indonesia 1%

China 4%

Other EMEA 8%

Norway 2%

Russia 2%

Netherlands 2%

France 2%

Italy 2%

April 26, 2017

Important information about financial figures

Kemira provides certain financial performance measures (alternative performance

measures) on non-GAAP basis. Kemira Group believes that alternative performance

measures, like operative EBITDA and operative EBIT, followed by Kemira management,

provide useful and more comparable information of its operative business performance.

Kemira’s alternative performance measures should not be viewed in isolation to the

equivalent IFRS measures and alternative performance measures should be read in

conjunction with the most directly comparable IFRS measures. Definitions of the

alternative performance measures can be found in the Definitions of the key figures at

www.kemira.com > Investors > Financial information.


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Jari Rosendal, President and CEO Petri Castrén, CFO April ......Industry & Water chemicals FY2016...

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